This document discusses how technology continues to revolutionize auditing. It provides a historical timeline of the internet and how auditors have adopted technology. Early adopters innovated with new methods using computers as auditing tools while laggards were more cautious. The impact of technologies like mobile computing, cloud services, and social media are described. The document outlines categories of audit software and tools that can support the audit process. It discusses trends in technology and their impact on auditing, including the need for auditors to have new technical skills. Overall it argues that technology will significantly affect auditing roles and practices in the future.

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HOW TECHNOLOGY CONTINUES
TO REVOLUTIONIZE AUDITING:
THE LATEST TOOLS AND THEIR
IMPACT ON THE PROFESSION
JIM KAPLAN CIA CFE
PRESIDENT AND FOUNDER
AUDITNET®
AHIA 31st Annual Conference – August 26-29, 2012 – Philadelphia PA
www.ahia.org
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Agenda
 Introduction
 Historical Timeline Internet and Auditors
 Technology’s Impact on Audit
 Innovation in Audit Research
 Evolution of Professional Networking
 Latest Technology Tools for Auditors
 Trends and the Future of Audit Technology

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Then and Now
Auditors and Technology
 Early Adopters
 Innovators (into the new
from Latin
 Interested in new
methods & techniques
 Risk takers
 Forward thinking
 Gen X & Y
 Laggards
 Wait and see
 Cautious
 Hangs back
 Last group to try or
adopt a new product
 Dislike change

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Evolution of Web for Audit
Computers, Auditors and CAATTs
 The Evolution of CAATTs 80’s
 Around
 Through
 With
 EDP/IT Auditors
 Mainframe
 Audit Software 90’s
 Data extraction and analysis
 IT and non IT Auditors
 Windows
 The Millenium
 Software for all phases (planning, fieldwork, GRC)
 Cloud computing

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Impact of Technology
 Computers and networks provide most of the
information needed for auditing
 Auditors must use the computer as an auditing
tool
 Auditors must also use the computer for audit
administration
Impact of New Technology on the
Profession
 Professional Standards
 16 Global Technology Audit Guides have been
released since January 2009

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New Technologies and their Impact
 Mobile computing
 The Cloud or Internet based services
 SaaS (application based)
 PaaS (end to end SDLC)
 IaaS (servers, storage, network)
Social Media
 Social Media Defined
 The good the bad
and the ugly
 What is the primary
risk?

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Technology as an Enabler
There is a wide array of specialized tools to
support and enhance the entire spectrum of
internal audit processes … for the most part
(auditors) are not taking advantage of them
Not surprisingly, survey participants predict that
technology will affect internal audit roles and
responsibilities more than any other business
trend.
PwC 2010 Study on the State of the internal audit profession
Audit Software

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Categories of Audit Software Technology
Automated
Issues
Tracking
Electronic
Work Papers
Risk
Assessment
Continuous
Controls
Monitoring
Anti Fraud
Software
GRC
Audit
Management
Software
Audit
Resource
Scheduling
Data
Analytics
Data Analysis for Auditors
Although internal auditors have been doing data analysis for
more than 25 years, it has only recently started to become
standard practice.
By our nature, most accountants and auditors are inclined to
stick with what has worked in the past, rather than reach
outside our comfort zone for an alternative that could help
us accomplish more.
Do you reach outside your comfort zone?

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Obstacles to Implementation
 Lack of an audit methodology
 Skill set gap
 Department size
 Cost implication
 Complexity of the software
 Resistance in training auditors
 Failure of software to meet audit departments needs
 Failure to plan for use
Heard on the Street
Technology Initiatives considered having the most
impact (2012 AICPA Top Technology Issues)
1.Information security
2.Remote access
3.Control and use of mobile devices
4.Business process improvement with technology
5.Data retention policies and structure
6.Privacy policies and compliance
7.Staff and management training
8.Spreadsheet management
9.Overall data proliferation and control
10.Portals (vendor and client/customer)

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New Tools for Auditors
New Tools
 Sept, 2008….
 Any device, Any time, Any
where was born
 Users not interested in
security, they want to trust,
not to be trusted
 Any unprotected device
connected to both the
Internet & and company
LAN poses a security risk

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Other Technology Tools for Auditors
 Open Source Audit Software
 Continuous Controls Monitoring
 Regulatory Compliance
 Business Intelligence Software
Audit Apps for iPhones/iPads

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Imagine the Possibilities
 Access your computer from remote locations
 Collaborate using tools from the road
 Access audit programs, work papers and more
from your mobile device
 Join Webinars and Webcasts for training
 Conduct or participate in virtual meetings with
staff, clients etc.
Trends and their Impact
 Mobile devices and wireless computing
 Smart devices and malware
 Cloud sourcing and computing – security, governance
and compliance
 Social media platform for communications
 Continuous risk and control assessment
 Reporting to the Board using SOTA technology

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Skill Set for Future Auditors
 Multi-disciplinary less accountants more
business oriented
 Critical thinking skills
 Strong communication skills
 Audit Technology oriented
The Impact of Technology Observations
Not surprisingly, survey participants predict that
technology will affect internal audit roles and
responsibilities more than any other business
trend.
High-performing internal audit functions maximize
the use of technology to enhance the efficiency,
effectiveness, and quality of operations.
PwC 2012 Study on the State of the internal audit profession

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AuditNet® Survey - 2012 State of Technology
Use by Auditors
Profile of Over 1,500 Responses
• 45% 5 or less auditors
• Technology tools used – mostly data analytics and
EWP
• Technology tools least used – monitoring (continuous
audit and fraud), GRC, risk compliance
• Only 17% feel that their auditors are technology
proficient
• Technology training primarily OJT
• 35% maintain an inventory of audit technology
tools
• More than half (54%) rated their department at the
informal use level (ad hoc or none at all) for audit
technology
• Less than 4% rated their department at the highest
maturity level
AuditNet® 10 Point Action Plan for Integrating
Technology in Audit
1. Conduct an inventory of audit technology tools
2. Provide training for all staff in use of audit
technology
3. Measure staff technology KSA
4. Build a business case for audit technology
5. Work with IT and Senior Management on cost
6. Hire auditors with technology skills
7. Find a technology champion and influencer
8. Establish an audit technology assessment
benchmark and update annually
9. Require the use of technology for all audit and
administrative tasks
10. Develop a succession plan so that audit software
does not become shelfware

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AHIA Improvement Needs Top 5
27
 Continuous Audit
 IT Audit Performance
 Data Analytics
 Enterprise Risk Management
 Clinical Processes
Future Predictions
 Standards will mandate use of technology tools for
audit
 New generation of auditors must have the KSA to
utilize technology
 If auditors and audit departments do not adapt to
new technology they risk outsourcing
 Social networking will evolve to professional
networking
 Tools will become more intuitive
 Knowledge hubs for audit tool, techniques and
resources will consolidate and merge

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Audit Programs in the Queue
AuditNet®
 Auditor’s Guide to Cloud Computing - Security
Considerations.xls
 Cloud Matrix_Benefits & Risks.xls
 AuditNet® Guide to Social Networking
 AuditNet® Guide to Wireless Security
 Business Continuity Planning – A Diagnostic Tool
 Forensic Document Examination
 Guidelines for Validation Testing
 Data Analytics Enabled Audit Programs for Key Business
Processes
 AuditNet® is working to provide tools and resources to
keep pace with new technology!
Conclusion
 I hope that I have provided you
with some useful information
that will stimulate your thought
processes!
 Any questions?

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Contact Information
Jim Kaplan CIA, CFE editor@auditnet.org
http://www.auditnet.org